In the old days, marketing gurus had to grab desperately at the scant information available to target customers. The dilemma now is ferreting out the information that matters — that gives the most bang for the buck — from the staggering amount of data available.
Big data today tells us everything we want to know. What customers buy. What products they buy together. Which store they visit. Which store they visit next. Which brands they prefer. Even, to a degree, what they’re thinking about buying.
Now add information collected by mobile devices — a burgeoning phenomenon which has opened up a new world of targeted advertising while also creating the equivalent of a virtual local mall.
But what data do you really need? Which data is critical and which is just noise? Remember, data costs both money and time to collect and use. I believe one of the keys to understanding a customer’s buying psyche is to know that their attitude matters. Most marketing managers use data on past customer behavior only for predicting spending habits, and overlook information on customer’s attitudes. The belief is that behavior includes attitude. I disagree. I think it is critical to know how customers feel about a product — not just that they bought it.
So, part of your marketing strategy should be understanding a customer’s attachment to brands. Why do they love Starbucks coffee and not Scooter’s Coffee? You can buy all that information from companies mining people’s chatter on Facebook, tweets and online searches. That’s information companies are using and it’s coming real time.
That doesn’t mean you should look past the history of people’s purchases. Both are important. But retailers still have to develop a capability of understanding what parts of that information is useful to them and what is not. That’s the hard part. Then we need to learn how to convert the information to an overall customer targeting strategy — one of the topics I address in my forthcoming book, “Cutting Edge Marketing Analytics: Real World Cases and Datasets for Hands on Learning,” co-authored by Paul Farris and Ronald T. Wilcox.
The strategy should be laser-like. We want to target that loyal customer who purchases stuff from us — but we don’t want to spend more money wooing him to return than he actually spends buying. If we have that pertinent information — and a million customers — we can make some real money. We also need to learn to not target those customers who are unlikely to purchase our products and would waste our marketing money.
Which brings me to the advent of mobile device data and loyalty programs. On a recent afternoon, Rob Masri, chief executive of Cardagin, a mobile marketing Network based in Charlottesville, scanned his iPhone app as we entered Eppie’s, a local restaurant.
Through the Cardagin app, Eppie’s could track a user’s visits and offer personalized coupons on the spot. That day, Masri was able to redeem a 90 percent discount for our lunch.
Masri recognized early on that using a mobile phone as a marketing medium was an effective way to reach an increasingly mobile consumer base. And it’s cheap for the retailer — subscriptions cost around $200 a month.
Using Cardagin’s smartphone apps, consumers can find their favorite local stores or explore new merchants, eliminating paper loyalty club cards and coupons and instead tracking and managing points and rewards on a smartphone. By accessing the merchant portal on Cardagin.com, merchants can create a mobile presence and target advertisements and promotions to those local consumers most likely to buy their services or products. Through Cardagin’s mobile loyalty technology, local businesses can monitor customer spending habits and make more intelligent and better-informed marketing decisions.
This is the new mall. The mall of the future.
As you consider your Big Data marketing strategy, there are other factors to consider. One is that if you don’t include information about competition in your customer profit model, you overestimate how much that customer is worth to you. You’re assuming, wrongly, that he’s just buying from you.
Secondly, competition can be a good thing. Think of it this way: it costs too much in money, time and energy for a customer to drive to your store only. But a gaggle of stores next to you makes your store’s location a destination spot.
We need to vet all the vast information we have at our fingertips through a strategic lens using known customer attitude, their purchasing history, and information about competition. And I believe we are at a pivotal point with the new type of loyalty programs offered by mobile devices.
The fundamentals of marketing have not changed. Figuring out the common needs of buyers is still important. So is the quality of the product and its price, for example.
But people are seeing big shifts in how consumers buy things. The purchase funnel — that tricky journey from when the customer first realizes a need to purchasing your product — is being questioned and changed.
» Rajkumar Venkatesan is the Bank of America research professor of business administration at the University of Virginia Darden School of Business, where he oversees a Web site on marketing analytics. He co-teaches the Darden Executive Education course “Strategic Marketing Management” Sept. 22-26. Looking for some advice on a new business, or need help fixing an existing one? Capital Business and the experts at the Darden School of Business are ready to assist. Contact us at firstname.lastname@example.org.
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